Too many cooks

HOUSING and Urban Development Minister Camille Robinson-Regis’s disclosure that Cabinet is mulling a proposal to turn the Housing Development Corporation (HDC) into a “holding company,” with no less than three subsidiaries in order to better pursue its mandate, raises questions about the State’s approach.

The minister’s attempt to assure stakeholders that no job losses are to ensue from this restructuring exercise also highlights the uncertainties now facing HDC workers in an environment that is already not conducive to job security.

According to the minister, the HDC will remain a corporation – as it is mandated to be under the HDC Act – but it will be the umbrella organisation for three entities: a construction company, a facilities management company and an asset management company.

The aim is to give the HDC greater financial flexibility and to monetise assets that are currently underutilised. The goal is also to improve governance, reduce risk and bolster the corporation’s reputation.

If we are to take at face value the assurances that there will be no job losses, it is hard to see why reforms within the current divisions of the HDC could not bring about all of these goals.

It is true that the formation of new companies may be a way to leverage assets in a way that could bolster the HDC’s position.

But this should also be balanced against the fact that it is also true that the corporation has identified major inefficiencies in its rent collection, inefficiencies which needlessly subject it to losing or foregoing millions of dollars of revenue.

Meanwhile, splitting one entity, effectively, into three is hardly the most obvious solution when it comes to bolstering governance and accountability.

In fact, such a move raises the prospect of having the opposite effect: now customers will simply not know which company is to blame for their problems. One popular saying comes to mind: too many cooks spoil the broth.

We concede, however, that there is benefit to be had from setting up specialist companies to perform certain functions. This is countered, though, by lost economies of scale which arise only when the entity is able to act as one large unit.

There is precedent for the splitting of government agencies into separate entities with specialist focus. This was done in relation to the company which once had overall oversight of tourism. How has that worked? The Government needs to study and then say whether that splitting of functions has yielded tangible results.

It is also the case that any tinkering with the current structures at the HDC may necessitate legislative changes, given that the corporation is established and governed by a binding law. But that depends on the finer details of this proposed plan which we hope are forthcoming.